The globally facing FTSE100 continues to rise although the UK-centric FTSE250 is more mixed in morning trading as Westminster's paralysis goes on ahead of looming Brexit deadlines. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
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Aston Martin Lagonda (AML) announced a $190m (£145m) 2022 bond placing yesterday evening with a coupon of 6.5 per cent. This is further to the $400m issued in April 2017 by the luxury car manufacturer, as it looks to assuage fears over the financial platform for its ambitious growth plans. The funds will be used for a range of purposes that includes the third phase of its ‘Second Century Plan’. Aston Martin increases its guidance for 2019 interest cost to around £63m from around £55m. Numis analysts do not expect this to affect the manufacturer’s net debt position, which is forecast at £587m at year end. The shares were flat on the announcement.
There’s a sense of déjà vu to Rockhopper Exploration’s (RKH) full-year numbers. Though the group ended 2018 with $40.4m in cash resources and no debt, it looks like investors will be waiting a while longer for Sea Lion to receive a final investment decision. Together with Premier Oil, the producer-explorer is gearing up to submit an application for formal senior debt funding this quarter, while that other potential share price catalyst – a result from the Ombrina Mare arbitration – might not arrive until October. Under review.
Shares in Wizz Air (WIZZ) were up more than 4 per cent in early trading after the airline reported that net profit for the year to March will be in the upper half of its guidance range of between €270m (£232m) and €300m. Over the rolling 12 months to March Wizz Air increased capacity by 14.9 per cent to 37.3m seats carrying 16.7 per cent more passengers at 34.6m, giving a load factor of 92.8 per cent. Management said the current financial year has “started well” with revenue per available seat kilometre forecast to increase by around 4 per cent for the full-year. Buy.
Ryanair (RYA) carried 5 per cent more passengers during March at 10.5m, or a 9 per cent increase to 10.9m when the contribution from Lauda is considered, with load factor of 96 per cent. Over the rolling 12 months, passenger numbers are up 9 per cent to 142m, with a load factor of 96 per cent. It also announced that its Portuguese pilots have voted in favour of a collective labour agreement. Shares fell more than 2 per cent in early trading. Buy.
Wincanton (WIN) stated that full-year underlying profits will be in line with expectations. Revenue is expected to be lower than the previous year as contract wins in the second half were too late in the year to mitigate the impact from contracts lost at the end of the previous financial year and first half of this year. The operating profit margin for the year is expected to benefit from the end of some low margin contracts. Revenue in the current financial year is expected to increase as those contract wins are recognised. Buy.
Shares in Hostelworld (HSW) were up 6 per cent in early trading after the company reported a 4 per cent increase in bookings under its own brand, with total group bookings flat as the group relies less on supporting brands. The company reported a 22 per cent increase in bookings from the app, with 40 per cent of bookings coming from the app. Reported revenue of €82.1m (£70.4m) was a slight decline on last year’s €86.7m, but an additional €2.9m of revenue has been deferred until next year due to the company’s new free cancellation policy. The company continues to be cash generative, with cash conversion of 97 per cent. Buy.
DP Eurasia (DPEU) reported a 30.9 per cent increase in system sales to TRY1.13bn during 2018, with adjusted cash profits up 21.8 per cent to TRY111m. This was driven by sales growth in Russia, Azerbaijan & Georgia, as well as its main market of Turkey, which went through a currency crisis during the year. Adjusted net income is a loss of TRY6.7m, affected by increased financial expense and foreign exchange loss. Shares fell 1 per cent in early trading. Sell.
KEY STORIES:
BHP (BHP) has placed its full-year iron ore guidance under review, after Tropical Cyclone Veronica caused a part-suspension part suspension of its operations in Western Australia. Initial inspections show no major damage, though isolated flooding has limited train movements to and from the group’s port and rail operations in Port Hedland, and will not return to full capacity until later this month. Final production impacts and unit cost guidance are yet to be determined, though the miner expects production to drop by “approximately 6 to 8 million tonnes”. Yesterday, iron ore rival Rio Tinto said the cyclone’s damage to its Cape Lambert A port facility would impact full-year iron ore production.
Nucleus Financial (NUC) reported a 13.5 per cent rise in average assets under administration during its maiden year trading as a publicly-listed entity. Active adviser numbers were up 6 per cent to 1,396, while customers grew over 93,000. Despite a reduction in the revenue yield to 30.6 basis points, adjusted pre-tax profits were up almost a third.
Non-Standard Finance (NSF) announced that it had received acceptances representing more than 50 per cent of Provident Financial’s (PFG) issued share capital, as it continues with its hostile takeover of its much larger rival. In response, Provident reiterated its concerns about the bid, including “specific concerns regarding certain historical dividend payments and share buybacks made by NSF”.
Yesterday, RhythmOne announced that it has become a wholly-owned subsidiary of Taptica (TAP). This morning, Taptica announced the appointment of Ofer Druker as chief executive with immediate effect. He is currently executive chairman of Tremor Video, acquired by Taptica in August 2017. He was also founder and chief executive of Matomy Media (MTMY) until April 2017. Following completion of the acquisition of RhythmOne, Taptica has learnt that RhythmOne’s trading for the year to March 2019 was below market expectations. Taptica’s directors “still strongly believe that, taking into account RhythmOne's trading performance to date, the merger is in the best interest of the shareholders of Taptica”. Management’s outlook for Taptica remains as outlined in its full-year results in March. It has also approved a programme to buy-back up to $15m of shares.
Shares in MP Evans (MPE) fell more than 4 per cent in early trading after the company reported $7.2m (£5.5m) in profit for 2018 due to lower prices for palm oil, compared to $95m last year, though the prior year benefitted from $68m in profits from the sale of its share in the Agro Muko joint venture. Group crops increased by around a third, with record production of crude palm oil, up 25 per cent to 192,500 tonnes. Management expect the price of palm oil to recover in the current financial year.
OTHER COMPANY NEWS:
Emis (EMIS) has completed the disposal of its non-core specialist and care business to Northgate Public Services, for £14.9m. This comprises £14m paid on completion (including £5m of intercompany debtor balances settled in cash by Emis on completion) and £0.9m of contingent consideration. The shares were up by around 2 per cent this morning.
Eco Animal Health (ECO) has received a marketing authorisation from the European Medicines Agency (EMA) for the use of its antibiotic Aivlosin in breeding chickens, specifically in preventing respiratory infections.
Oxford Biodymanics (OBD) has established a new US subsidiary company known as Oxford BioDynamics Inc. Glen Ferguson has been appointed as senior vice president, USA, to lead business development activities in the United States.
YouGov’s (YOU) revenues grew by 18 per cent over the half-year to January 2019, buoyed by 34 per cent growth within its data products and services business to £37.2m and 4 per cent growth to £30.4m for its custom research business. Adjusted operating profits rose by 41 per cent to £12.5m, while statutory operating profits climbed by 92 per cent to £8.4m. The group has set itself new five-year “stretching” targets – aiming to double group revenue, double group adjusted operating profit margin and achieve a compound annual growth rate of more than 30 per cent for adjusted EPS.
Hot on the heels of yesterday’s announcement, Serco (SRP) has won another contract. This one is with the US Air Force and has a total potential value of $82m (£63m). The group will “manage, configure, deploy, sustain and enhance” Air Force Civil Engineering’s NexGen IT Solutions over an initial period of a year, with the option for four option years and a six-month extension of service option.
The UK Justice Department has announced it will renationalise HMP Birmingham, the troubled prison operated by G4S (GFS). The security group was awarded the contract to run the prison in 2011, and was due to do so for 15 years, but the government stepped in last August, replacing the leadership team and requiring G4S to hire 30 additional guards. As we wrote in our initial article about the prison, the group looks unlikely to suffer badly from the contract loss. Shares were flat on the announcement.
